Why Salon Owners Don't Pay Themselves Properly (And How to Fix It in 2026)

I've been coaching salon business owners now for almost a decade, and you want to know the problem that keeps coming back again and again and again? It's owners who are working their arses off in their businesses and not paying themselves properly. Hello, hello, hello, my salon friends. Phil Jackson here, your queen of salons, coming all over the internet with another dose of my Wise Owl wisdom. How on earth are you? Achingly well, I hope, as we reach somewhere towards the middle of January. How's it going for you? How's 2026 kicking off for you? I'm seeing a nice strong start from some of my group coaching customers, which is always a bit of a joy. I always think it's a bit gloomy when you start a new year on a down note. And we're all terribly excited, of course, because we're heading off to Tenerife at the end of the month for my salon owners retreat for a bit of well-earned sunshine. It's snowing here today. And frankly, my darlings, you can fucking keep it. Your Uncle Phil was definitely built to be solar powered. So what are we talking about today? Well, this is something that I see again and again and again in my coaching work, in one-to-one, in group coaching work as well. This year alone, I've already had two conversations with people who are looking into coaching with the same problem. They've got a salon that looks like it's thriving. It's busy. The columns are full. Some of them have got decent teams in place as well. And yet the owner is barely paying themselves at all. And I've heard this a few times over the years, too. And basically, the truth for a lot of salon business owners is if they put themselves on the same wage structure as one of their team members, they couldn't afford to pay themselves. That means, my darlings, you're not building a business. What you've built is an expensive hobby that happens to have staff as well. And here's the thing. I know that nobody comes into our industry for the money. I think there's a good living to be made, especially these days, but there are easier ways to make the kind of money that we do. We all know that. But that doesn't mean that you don't sometimes need a holiday. It doesn't mean that you don't deserve to drive a nice car or live in the kind of house that you want to. It doesn't mean that we shouldn't be putting your lifestyle first. And as the business owner, you're taking on a huge amount of risk. And I think that that risk deserves some kind of payoff. There needs to be something in exchange for that risk. So if you're working harder than everyone else in your business, if you're carrying all the risk and somehow taking home less money, well, how long are you going to maintain that for?

A year, two years, five years? Perhaps you're going to lean on a partner all this time. Wait until they start getting resentful, my darlings. But more than anything, what happens when you burn out, when you feel that it's just not worth it anymore? Now, there are, I see it as three reasons that salon owners don't pay themselves properly. The first one is guilt. They feel like they need to put their teams first. They need to put the business first. They need to pay everybody else before they pay themselves. And I'm calling bullshit on that. You are not a charity. You are in it for the profit. There's the very definition of a business. Heck, in some instances, if you're a shareholder in the business, the business, the people that are running the business have a legal obligation to generate profit. That's what business is there for. If I bought something, I don't know, let's say I bought some concert tickets and then sold them on for exactly the same price as I bought them and thought that I was doing a wonderful job. You think I was insane. The whole point of this enterprise is that we generate a business which firstly makes the business sustainable and secondly means that you're rewarded as the business owner. Reason number two is I think there's an awful lot of fear. What if next month is quiet? What if I can't make payroll? What if something comes along that means that there isn't enough money in the business? I'll just wait until things are a bit more stable. Thing is, things are never going to be stable. That's not how business works. Yes, there are things that we can do to make ourselves feel better and feel more secure in our businesses. Salon memberships being a big one, of course, building some reserves in the business. And we're going to talk about that a bit later on in this episode as well. But ultimately, business is up and down. That's the risk that we're taking and that risk deserves some reward. And reason number three is confusion. I think there are a lot of you, salon business owners, who don't know how much you can pay yourselves and you don't understand the difference between wages and dividends. Your accountant is just telling you to take what's left or a portion of what's left or, hell, the accountant is saying there should be something left and you don't know where that is. And that's what we're talking about today. So the framework that works, the system that still works after all these years is we need to mentally or physically separate your wage into two roles.

You've got the money that you earn as a worker in your business, as a stylist, as a therapist, as a manager. And then you've got the money that you earn as the owner. So as the worker, you get paid wages, the same as the rest of your team, and calculate it in the same way. If you had to replace yourself as, let's say, a beauty therapist who was also the team manager, what would you expect to pay that person? That goes through the payroll. We pay the tax and national insurance on it. We have pension contributions attached to it as if you were employed. So if you're doing 20 hours of services at £20 an hour, that's 400 quid. Sweet and simple. Add in that management time if you're not actually carrying out service, but you've got other tasks as well. This is a cost in your business. It gets paid first alongside your team's wages. Now, if you can't afford to pay yourself that wage, you've got a profitability problem around your wages. And it's probably a pricing problem. That's urgent and you need to fix it. Part two of what you can take out of the business is your dividends, your reward as the owner, as the person who's taking the risk, as the investor in your business. And it's the reward for the personal guarantees that you've put in place, for the loans that you took out to start the business, for the sleepless nights that your business is causing you. The fact that if this business fails, your team can find another job in no time at all. Just like that. There's so many people looking to employ good hairdressers and beauty therapists in our industry, whereas you would be picking up the pieces for quite a long time. So there's a risk that you take as the business owner that your team just doesn't take. And those dividends have to come from profit. You can't take dividends from a business that doesn't generate profit. You're not allowed. Legally, you can't take dividends from an unprofitable business. So every quarter or every couple of months, if you're doing well, you take a slice of what's left after all of your costs have been paid out. And this isn't greed. This is literally why you took the risk in the first place. Now, you can't take all of that profit because your business needs some as well. We need to retain some in the business to start building up some reserves, to build a buffer against bad times.

But also, you might want to reinvest some of that profit in terms of maintaining your premises, investing in training, investing in new equipment. But I reckon in the good times, and if you haven't got anything extraordinary on the horizon, about 50% to 80% of that profit could be taken out of your business as dividends. Speak to your accountant about it. Don't take my word on that. But I am going to put my neck on the line and putting my finger in the air and measuring the temperature of our industry as it is at the moment. Here's the real numbers I think we could be striving for as a minimum in 2026. If you've got a small salon, if it's just you and maybe one or two team members, I think your wage should be somewhere between minimum $24,000 to $30,000 a year. And then your dividends on top, about another $12,000 to $24,000. So total income, I think you should be looking at between $36,000 and maybe $54,000 a year. Medium-sized salon, which is my sweet spot, it's where most of my customers are, where you've got maybe three to five team members. I think wage-wise, you can probably be looking at about $40,000 a year and then dividends about the same on top as well. But speak to your accountant about the best way to take money out of your business. If we're looking at a bigger salon, then we could be looking at wages $50,000 plus, dividends $60,000 to $100,000. We could be making $150,000, $160,000. And these aren't outrageous numbers. If you're working 45, 50, 60-hour work weeks, carrying all that risk, managing people, dealing with suppliers, stressing about payroll, this is what you should be earning. So what do we do? How do we start this year? Well, firstly, you calculate what you should be paying yourself. Figure out the hours that you're working. Set yourself a target for your dividends and then add them up. That's your number. Then look at what you're actually taking right now. Be really honest with yourself and measure that gap. And if there's a gap, you've got two options. The first is to increase your revenue, more services, higher prices, get the memberships in, get the upsells, get the retail. Option two is to cut your costs but not your wages. That's the sacred cow that we are not going to be slaughtering in an effort to make more profits. So you've got the monthly wage going to yourself. You've got your quarterly dividend. And we need to review that and speak to your accountant as well on a regular basis.

This isn't optional. This is how we build a sustainable business. We stop subsidizing our businesses and you keep your motivation in the longer term. Now, you could be sitting there thinking, Uncle Phil, I've got no idea how to make my salon profitable enough to actually pay myself. Well, of course, I have an entire program built around this. It's my profit and pricing program. It's the system I use with all of my one-to-one clients. We talk about pricing, profitability, putting profit first. The whole thing is called Get Paid Properly. Go to getpaidproperly.com and put the link in the show notes for you as well. Of course, you might want one-to-one help with this as well. Book a call. Head over to buildyoursalon.com. I've put those links in the show notes as well. But whether you work with me or not, please promise me you'll stop working for free in your own business. You deserve better than that, my darlings. So, there we have it. Wage for the work. Dividend for the risk. Get it set up in 2026. What have I missed? Reach out and let me know. I'd love to be hearing from you about this. My email address scrolling at the bottom of the screen. Also, reach out if you would like to be a guest on a future episode of the Build Your Salon podcast. Phil at buildyoursalon.com. I'd love to be sharing your story with my wonderful Build Your Salon listeners. Just a few short days until I'm coming all over the airwaves again with another dose of my wise hour wisdom. And until then, take care.